The Minister of Employment and Immigration Thomas Lukaszuk announced recently that minimum wage in the province would remain at $8.80 per hour, dismantling a system of wage increase less than two years after it was implemented.

The minister cited the decision as instrumental in insuring the recovery and competitiveness of small businesses as the province bounces back from the recesssion.
“It wasn’t a given that minimum wage would increase, it was only in the past two years that the government introduced a reasonably fair system of making regular adjustments to minimum wage,” said Alberta Federation of Labour President Gil McGowan. “Between the late 80’s and late 90’s there were long periods of years where minimum wage did not change at all.”

McGowan said that during that period, the actual purchasing power of the minimum wage dropped by as much as 60 percent in light of inflation rates.

“We feel we’ve taken a huge step backward,” said McGowan. “It’s only recently they did what they should have done 30 years ago by introducing a system to index the minimum wage, and we’re incredibly disappointed they are dropping the system barely a year after it was introduced.”

The provincial government only started linking the minimum wage increases to the Alberta weekly earning index in June 2007, leading to an increase from $8.00 to $8.40 in April 2008, and to the current 8.80 in April of last year. The minimum wage in Alberta ranks sixth in the country.

“Indexing minimum wage was applauded by the vast majority of Albertans,” said McGowan. “The inevitable result is that the value of the minimum wage will erode as inflation continues it’s upward march.”

McGowan said the real worry is the economic and social impacts the decision will have on the provinces lowest paid workers.

“Without a system for adjustments the minimum wage went from being a subsistence wage to being a real poverty wage when there were no increases,” said McGowan. “Our most vulnerable workers will pay the price.”

McGowan said if they had stood by the weekly indexing system, the minimum wage would have risen only 12 cents in 2010–an amount he said would have little impact on small businesses.
“I find it hard to believe such a small increase would have had any significant impact on employment,” said McGowan. “I don’t believe for a minute that this freeze will create jobs or maintain jobs, all it will do is pick the pockets of our vulnerable workers.

McGowan said studies indicate modest increases in minimum wage don’t result in job losses during recessions, in fact, wage increases can have the opposite effect.

“Increasing the minimum wage modestly can actually create more jobs because low wage workers tend to spend all their money in local communities instead of saving or investing it, or buying luxury imported goods,” said McGowan. “The wages paid to the lowest workers tends to be recycled in their community.”

Whitecourt Star, Tues Mar 2 2010
Byline: Mike Constable